The US economic downturn has resulted in record consumer debt of 2.6 trillion dollars.  Even more troubling, consumers have fallen behind on credit card debt, personal loans and other unsecured debt at a record breaking pace—the highest since the American Banking Association began tracking the data in 1974. 

As consumer debt reaches crisis proportions, the number of consumer debt programs has more than doubled—to over 2,000—spawning a surge in fly-by-night credit counseling, debt settlement and debt consolidation companies. 

Don't Get Scammed

Although there are many legitimate companies offering debt relief and credit counseling services, the Federal Trade Commission (FTC), Congress and States' attorneys are beginning to take a hard look at companies more interested in helping themselves than helping their clients.

Make certain you chose the right solution for you situation.  In fact, a "professional" debt negotiator or debt settlement company may do you more harm than good at cited in a recent New York Times article:

·     Debt consolidation - Requires that you apply for another loan or debt consolidation loan.  Nearly impossible if you have bad credit.  The loan may have to be collateralized by use of the equity in your home, thereby taking your unsecured debt and turning it into high-risk secured debt.  Not a smart move and there is a good chance you could be forced into bankruptcy or worse.  Common sense tells us not to go into debt to get out of debt.

·     Credit counseling - Non-profit does not always mean safe.  Nearly every ad your see, hear or read are "non-profit organizations"  Indeed they may be, however, most of these firms are funded in part by the very credit card companies and banks you're indebted to.  If, and only if you meet your creditors requirements, the "counselor" will get you a lower interest rate in most cases, but you will have to pay back the entire balance you owe.  If you miss a payment, you may get removed from their program. These companies require that you set up a reduced and strict payment plan with your credit card company, while they collect a large up-front fee from you and a monthly maintenance fee, all while collecting a fee from your credit card company. You might as well file for bankruptcy because credit counseling will be reported as bad credit.  75% of all people in credit counseling do not successfully complete the program.

·     Bankruptcy - Just like many other debt relief programs, you have to qualify for bankruptcy.  If you do qualify, bankruptcy requires that you appear in court will be a matter of public record.  Bankruptcy will ruin your credit and stay on your credit report for up to 10 years.  This should be a last resort option.

Reduce your debt up to 70%!

·     Debt Settlement - If cutting your unsecured debt by more than half appeals to you, then debt settlement is your best option.  Mortgages, auto loans and other types of collateralized loans are secured debts and usually cannot be renegotiated.  Credit card, department store cards, gas cards and medical bills are unsecured and can be renegotiated.   

"If you want something done right, do it yourself"--Unknown 

Whom can you really trust?

For most people, the prevailing mindset is that they need to hire a professional to negotiate their debts.  Quite the contrary!  There is no secret formula to negotiating your debts.  Who better to negotiate than (you) the debtor?  Ask yourself, does a so called "professional" know more than you about your debts?  The professional negotiator is simply an individual that has negotiation skills.   If you have ever negotiated or "haggled" the price of an item or terms of anything, you can negotiate a debt settlement.  More importantly, in today's economy, cash starved banks and credit and credit card companies are making settling easier than ever and are eager to settle delinquent accounts for as low as 30% of the balance owed!